Synopsis of three batches of Writ petitions dealt in by Hon'ble Delhi High Court in Super India Paper Products Benlon India Limited Vs UOI.

[Dhruv Chhabra]

The transitory mechanism was not smooth and easy for numerous taxpayers. Several factors including technical glitches and shortcomings in the online system, prevented or obstructed them from filing TRAN-01 Form error free.

It must be appreciated that the since GST is an electronic based tax regime, the taxpayer would need time to be conversant with the system and thus deserve a second chance and it is recognized that many taxpayers do not possess the know-how or the means to file electronic forms and further considering that the transition happened rather rapidly, they should be given the benefit of doubt.

We are aware that some high courts have taken a different view from the one taken by Delhi High Court, but nonetheless, this court has consistently upheld the right of taxpayers to claim transition of CENVAT Credit.

The necessary amendments in CGST Rules, 2017 (hereinafter “the Rules”) were also made by incorporating Rules 117(1A) and 120A, and correspondingly the deadline for filing TRAN 01 form was extended however this benefit was confined to specific class of taxpayers in respect of whom the GST Council has made the recommendation and also for taxpayers who had faced technical glitches and they were able to substantiate the failure in filing of TRAN-01 by way of digital evidence the sanctity of which was verified by the Nodal officer of the ITGRC.

The date prescribed for filing of Form GST TRAN-1 under Rule 117 (1A) of the CGST Rules has been extended to 31.12.2019 and further to 31/3/2020. This itself demonstrates that the Respondents recognize the fact that the registered persons were not able to upload the Form GST TRAN-1 due to the glitches in the system.

It is not fair to expect that each person who may not have been able to upload the Form GST TRAN-1 should have preserved some evidence of it-such as, by taking a screen shot.

Many of the registered dealers/traders come from rural/semiliterate background. They may not have had the presence of mind to create any record of their having tried, and failed, to upload the Form GST TRAN-1. They cannot be made to suffer in this background, particularly, when the systems of the Respondents were not efficient.

From the documents placed on record, it emanates that the Respondents have no cogent ground to deny the benefit of the Notification No. 49/2019  dated 09.10.2019 issued specifically to grant relief to taxpayers who faced difficulty in filing Form GST TRAN-1 due to technical glitches. Thereafter when he engaged in communication with the respondent, there was no genuine ground forthcoming except for stating that the due date for filing of Form GST TRAN-1 was over.

The Court has also delved into the irrationality of Rule 117(1A), since it applied to only once class of persons who face the technical difficulty on the common portal without defining the said concept in the Act or rules framed thereunder. It observed the benefit of such rule should be available to all the taxpayers.

In TRIVENI NEEDLES PVT. LTD. THROUGH: ITS AUTHORISED REPRESENTATIVE GURPREET SINGH VERSUS UNION OF INDIA, THROUGH: MINISTRY OF FINANCE, SECRETARY & ORS. [2019 (12) TMI 1001 - DELHI HIGH COURT], this court has extended benefit to all the taxpayers who did not have some electronic record.

It is noted that one of the petititon dealt in the by SUPER INDIA PAPER PRODUCTS BENLON INDIA LTD., AND OTHERS VERSUS UNION OF INDIA THROUGH MINISTRY OF FINANCE, SECRETARY & ORS. UNION OF INDIA & ORS. COMMISSIONER, DELHI GOODS & SERVICES TAX & ANR. [2021 (6) TMI 108 - DELHI HIGH COURT] the Apex Court has stated that it is a case wherein the Petitioner has been able to claim a certain part of the CENVAT credit that it is entitled to but, has missed out on a component of the CENVAT credit due to inadvertent clerical errors. These facts are similar to those in another judgment, to which one of us (Sanjeev Narula J.) was a party. In that case, i.e., NATIONAL INTERNET EXCHANGE OF INDIA VERSUS UNION OF INDIA & ORS. [2021 (2) TMI 38 - DELHI HIGH COURT], the Petitioner had missed out on certain invoices pertaining to inputs and input services on which service tax was paid, while filing the TRAN-1 Form. The Petitioner therein approached the competent authorities, but no action was taken and was thus, constrained to file a writ petition. This Court, while allowing the writ petition, held that-

“8. On perusal of the record, it emerges that Petitioner has filed TRAN-1 form within the time prescribed by the Respondents under the rules. Petitioner is holding documents evidencing payment of tax by it on such inputs / input services received under the erstwhile tax regime. It is thus eligible to carry forward the credit from erstwhile tax regime to the GST regime under Section 140 of the CGST Act read with Rule 117 of CGST Rules. Petitioner claims that this error has occurred because of the introduction of new and vastly different tax regime (GST) of which the Petitioner had no prior experience whatsoever, and thus it was new to the filing of Form GST TRAN-1 as well. For the aforesaid bona fide human error, inadvertently, it failed to take into account certain invoices, on which service tax amounting to ₹40, 36,542/- was not reflected in TRAN-1 Form. ”Since the Petitioner in SUPER INDIA PAPER PRODUCTS BENLON INDIA LTD., AND OTHERS VERSUS UNION OF INDIA THROUGH MINISTRY OF FINANCE, SECRETARY & ORS. UNION OF INDIA & ORS. COMMISSIONER, DELHI GOODS & SERVICES TAX & ANR. [2021 (6) TMI 108 - DELHI HIGH COURT] is in a similar quandary, there is no reason to deny it the benefit of the above cited order.

In view of the above, there is no reason why a similar relief should not be granted in the present set of petitions. Accordingly, the aforesaid petitions are allowed.

IThe Apex Court has held that t is seen that since there is no effective mechanism provided for the revision/rectification of TRAN-1 Form, the Petitioners were forced to approach this Court under Article 226 of the Constitution. There is no dispute as to the fact that the Petitioners filed the TRAN-1 Form within the prescribed time, however, they were precluded from claiming their transitional credit on account of inadvertent error on their part due to filling in of wrong details or omissions. In the opinion of this Court, a genuine mistake should not result in the Petitioners’ losing out on their accumulated credit which is protected by Article 300A of the Constitution. The lack of an effective revisional mechanism would leave the taxpayers remediless, which, to our minds, could not be the intention of the law, and moreover, no provision was brought to our notice which extinguishes the said right of the taxpayer. For such reasons, the present set of cases are also allowed.

The Apex Court noted that similar relief has been granted by this Court in several decisions including M/S. BLUE BIRD PURE PVT. LTD. VERSUS UNION OF INDIA & ORS. [2019 (7) TMI 1102 - DELHI HIGH COURT], Pending SLP (UNION OF INDIA & ORS. VERSUS M/S BLUE BIRD PURE PVT. LTD. - 2020 (2) TMI 1507 - SC ORDER) M/S. AADINATH INDUSTRIES & ANR. VERSUS UNION OF INDIA & ORS. [2019 (10) TMI 91 - DELHI HIGH COURT], and Aagman Services Private Limited Versus Union Of India & Ors. - 2019 (11) TMI 1248 - DELHI HIGH COURT SLP Dismissed,(NODAL OFFICER DELHI STATE GST DEPARTMENT VERSUS AAGMAN SERVICES PRIVATE LIMITED AND ORS. - 2021 (1) TMI 553 - SC ORDER) In the decision in Blue Bird (supra), this Court held as under:

“12. In the present case, the Court is satisfied that, although the failure was on the part of the Petitioner to fill up the data concerning its stock in Column 7(d) of Form TRAN-1 instead of Column 7(a), the error was inadvertent. The Respondents ought to have provided in the system itself a facility for rectification of such errors which are clearly bona fide. It should be noted at this stage that although the system provided for revision of a return, the deadline for making the revision coincided with the last date for filing the return i.e.27th December, 2017. Thus, such facility was rendered impractical and meaningless.”

Conclusions and Directions of Delhi High Court-

All the petitions in the first, second and third batch are allowed, and all the pending applications also stand disposed of.

Respondents are directed to either re-open the online portal so as to enable the Petitioners to file TRAN-1 Form electronically, or to accept the same manually on or before 30th June, 2021. The Respondents shall process the Petitioners’ claims in accordance with law once the TRAN-1 Form is filed.